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Boaz Weinstein, the high-profile former Deutsche Bank prop trader, and Dan Stern’s $6bn alternatives firm Reservoir Capital, are backing a new credit hedge fund firm led by a one-time protégé of Weinstein.

Boaz Weinstein (Source: Getty Images)

Weinstein and Reservoir are providing capital to Camares Capital, according to two people familiar with the situation. Camares has been set up by Antoine Cornut, who led flow credit trading in the Americas and Europe at Deutsche Bank until he left last year. Weinstein hired Cornut to Deutsche Bank in 2007.

It is not yet known how much each backer is committing.

Cornut declined to comment. A spokesman for Weinstein declined to comment. Reservoir did not respond to a request for comment.

Weinstein was in the news last year when it emerged he was among the investors to have profited from having taken the other side of JP Morgan's now infamous London Whale trades http://nyti.ms/11uq1Li.

Camares is preparing to launch a European credit hedge fund in March, pending approval from the UK’s Financial Services Authority, according to a person familiar with the situation. There are eight people on the team including Cornut’s former Deutsche Bank colleagues Julien Marie and Askin Aziz. It has recently hired Aravind Chandrasekaran from JP Morgan to the investment team.

Weinstein, a chess master, was a proprietary trader at Deutsche Bank and became one of its youngest managing directors at the age of 27. His credit trading group at Deutsche Bank made billions of dollars for the bank, according to a person familiar with the group. But in 2008 the group he ran erased more than two years of trading gains from being on the wrong side of so-called negative basis trades, which saddled the bank with $1.8bn in losses, The Wall Street Journal reported.

Weinstein left Deutsche Bank and set up Saba Capital Management in February 2009. The firm now runs $5.3bn. Its main fund was up 3.9% in January, according to an investor.

Reservoir is a prominent seed investor, which means it normally invests in a manager in exchange for a stake in the business. Typically it invests $100m-$150m in each manager, according to a person familiar with the situation. The terms of the Weinstein and Reservoir investment in Camares remain unclear.

--write to harriet.agnew@dowjones.com

• This story now contains updated details of Weinstein's credit trading group at Deutsche Bank following additional information from a source familiar with the group